Taxability of Share Market Transactions

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Special provisions Section 94 (1),(2) & (3) • Provisions to curb tax avoidance – Securities sold and then repurchased – Beneficial interest in securities transferred during the yr • Applicable to business as well as capital assets • Provisions not applicable, in case: – There is no avoidance <strong>of</strong> income tax or – That the avoidance was exceptional & not systematic with no such avoidance in the previous 3 yrs
Loss in dividend stripping transactions Section 94 (7) • Securities/ units acquired within 3 months prior to the record date • Such securities sold with in 3 months after such date or • Units sold with in 9 months after such date • Dividend or income received is exempt • Loss arising from the transaction to the extent <strong>of</strong> dividend to be ignored • Term “securities” to include stocks & shares
Page 1 and 2: Taxability of Capital Market transa
Page 3 and 4: Statutory provisions • Business
Page 5 and 6: Effect of Section 88E • Scheme be
Page 7 and 8: Speculative transactions • Sectio
Page 9 and 10: Speculative transactions Proviso (d
Page 11 and 12: Speculation business • Explanatio
Page 13 and 14: Explanation to section 73 Implicati
Page 15 and 16: Long term capital asset • Held fo
Page 17 and 18: Equity shares Section 10(38) • Lo
Page 19 and 20: Rate of tax on LTCG Section 112 •
Page 21: Cost of acquisition of shares Secti
Page 25 and 26: Implication • 1000 Shares purchas
Page 27 and 28: Capital Gains/ Business Income Suni
Page 29 and 30: Capital Asset Capital asset means p
Page 31 and 32: Authority for Advanced Rulings •
Page 33 and 34: Judicial precedents • Raja Bahadu
Page 35 and 36: Draft Instructions dt 16/5/2006 •
Page 37: Final outcome • Circular does not
Page 40: Transfer • Conversion of preferen

Taxability of Share Market Transactions

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